SEC News Digest

COMMISSION ANNOUNCEMENTS

Commission Meetings

Open Meeting on March 30, 2011 at 10:00 a.m.

Item 1: The Commission will consider whether to propose joint rules with other Agencies to implement Section 941(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act relating to credit risk retention by securitizers of asset-backed securities.

Item 2: The Commission will consider whether to propose a new rule and rule amendments to implement Section 952 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which requires the Commission to direct the national securities exchanges and national securities associations to adopt certain listing standards with respect to compensation committees and compensation advisers. Section 952 also requires the Commission to adopt new disclosure rules concerning the use of compensation consultants

At times, changes in Commission priorities require alterations in the scheduling of meeting items. For further information and to ascertain what, if any, matters have been added, deleted or postponed, please contact: The Office of the Secretary at (202) 551-5400.

ENFORCEMENT PROCEEDINGS

Delinquent Filer’s Stock Registrations Revoked

An Administrative Law Judge has issued an Order Making Findings and Revoking Registration by Default as to China Expert Technology, Inc., in Carrier1 International S.A., Admin. Proc. No. 3-14257. The Order Instituting Proceedings (OIP) alleged that two Respondents repeatedly failed to file required annual and quarterly reports while their securities were registered with the Securities and Exchange Commission. The Administrative Law Judge found these allegations to be true as to China Expert Technology, Inc., and revoked the registration of each class of its registered securities, pursuant to Section 12(j) of the Securities Exchange Act of 1934. The proceeding is still pending as to Carrier1 International S.A., the other respondent named in the OIP. (Rel. No. 34-64118; File No. 3-14257)

Delinquent Filer’s Stock Registrations Revoked

An Administrative Law Judge has issued an Order Making Findings and Revoking Registration by Default (Default Order) in Andresmin Gold Corp., Admin. Proc. No. 3-14214. The Order Instituting Proceedings alleged that Andresmin Gold Corp. repeatedly failed to file required annual and quarterly reports while its securities were registered with the Securities and Exchange Commission. The Default Order finds these allegations to be true and revokes the registration of each class of registered securities of the company, pursuant to Section 12(j) of the Securities Exchange Act of 1934. (Rel. No. 34-64116; File No. 3-14214)

In the Matter of Roman Lyniuk

The United States Securities and Exchange Commission (Commission) announced the issuance of an Order Instituting Administrative and Cease and Desist Proceedings Pursuant to Section 8A of the Securities Act of 1933 (Securities Act), Sections 15(b)(6) and 21C of the Securities Exchange Act of 1934 (Exchange Act), Sections 203(f) and 203(k) of the Investment Advisers Act (Advisers Act) and Section 9(b) of the Investment Company Act (Investment Company Act) against Roman Lyniuk (Lyniuk).

The Division of Enforcement alleges in the Order after an investigation that from approximately 2004-2007, Lyniuk was the principal of Atlantis Capital Markets NA, LLC, a now-insolvent entity that acted as the investment advisor to Atlantis Capital Management L.P., a hedge fund (Fund). At the same time, he was a registered representative at several broker-dealers registered with the Commission, including Vtrader Pro LLC and Golden Beneficial Securities

The Division of Enforcement also alleges that Lyniuk made material misrepresentations and omissions to potential investors concerning the Fund’s historical performance and assets under management.

In the Order, the Division of Enforcement also alleges that, contrary to an express representation that he had no undisclosed conflicts of interest, Lyniuk received substantial undisclosed volume-based compensation from the broker-dealers through which he traded the Fund’s assets. Lyniuk also had a conflict of interest in connection with his investment of Fund assets in a start-up venture, from which he received substantial compensation and expected to receive compensation in the future.

Finally, the Division of Enforcement alleges that approximately 90% of the Fund’s assets were lost in August through October 2006 through a combination of trading losses and misappropriation by Lyniuk.

A hearing will be scheduled before an Administrative Law Judge to determine whether the allegations contained in the Order are true, to provide the Respondent an opportunity to dispute these allegations, and to determine what, if any, remedial sanctions are appropriate in the public interest pursuant to Section 15(b) of the Exchange Act, Section 203(f) of the Advisers Act, and Section 9(b) of the Investment Company Act.

The Order requires the Administrative Law Judge to issue an initial decision no later than 210 days from the date of service of the Order, pursuant to Rule 360(a)(2) of the Commission’s Rules of Practice. (Rel. No. 33-9198; File No. 3-14304)

Commission Charges Company Executive With Insider Trading

The Securities and Exchange Commission announced the filing of a civil injunctive action in U.S. District Court in Alexandria, Virginia against Daniel F. Wiener II of Leesburg, Virginia. The Commission alleges that Wiener engaged in insider trading by purchasing securities of MTC Technologies, Inc. (“MTC”) prior to MTC’s public announcement that it had entered into a definitive agreement to be acquired by BAE Systems, Inc. (“BAE”).

According to the Commission’s complaint, during December 2007, Wiener was an executive at BAE and, in the course of his employment, learned material, nonpublic information regarding BAE’s plan to acquire MTC. Although he was not directly involved in the acquisition of MTC by BAE, prior to the public announcement he had regular contact with other BAE employees who were involved in highly confidential preparations for the acquisition. On December 7, 2007, Wiener participated in a staff meeting during which the proposed acquisition of MTC was discussed under its code name, “Project Mira.” The Commission alleges that Wiener actively participated in the discussion and shared detailed information concerning the target’s business, including its aircraft integration capabilities and specific contract bidding opportunities, which showed that he knew “Mira” referred to MTC. Approximately thirty minutes after the scheduled end of the staff meeting, Wiener placed an order to purchase 10,000 shares of MTC in his personal brokerage account. On December 12, 2007, Wiener placed an order to purchase an additional 1,000 shares of MTC in his wife’s brokerage account. After the market closed on Friday, December 21, 2007, MTC publicly announced its agreement to be acquired by BAE. On January 28, 2008, Wiener sold all 11,000 shares of MTC, realizing a profit of $67,686.99.

The Commission’s complaint charges Wiener with violating the antifraud provisions of the federal securities laws. Without admitting or denying the allegations in the complaint, Wiener has consented to the entry of a final judgment permanently enjoining him from violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and requiring him to pay disgorgement of $67,686.99, prejudgment interest of $8,323.17, and a civil penalty of $25,000. The Commission recognizes the Financial Industry Regulatory Authority for its assistance in this matter. [SEC v. Daniel F. Wiener II, Civil Action No. 1:11cv292-GBL/IDD, E.D. Va.] (LR-21896).

The Securities and Exchange Commission announced that, on March 23, 2011, it filed a civil action in the United States District Court for the District of Utah against Mike Watson Capital, LLC (MWC), a company based in Provo, Utah, Michael P. Watson, a resident of Mapleton, Utah, and Joshua F. Escobedo, a resident of Spanish Fork, Utah, alleging that each of the Defendants violated the antifraud and securities offering registration provisions, and that Watson and Escobedo violated the broker-dealer registration provisions of the federal securities laws.

In its Complaint, the Commission alleges that from October 2004 through February 2009, Defendants raised more than $27.5 million from more than 120 investors through MWC’s issuance of promissory notes. According to the Complaint, Watson and Escobedo told investors that returns were generated by real estate investments, and backed by substantial equity and cash flow produced by company properties. In reality, the properties never generated sufficient income to cover investment interest or redemptions, and therefore investor returns were paid primarily from new investors’ funds.

MWC, Watson, and Escobedo agreed to settle the SEC’s charges without admitting or denying the allegations in the Complaint. This settlement is subject to approval by the court. MWC agreed to be permanently enjoined from violations of Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 (Securities Act), Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder, and imposing jointly and severally with Watson, disgorgement of $16,383,037.83 and prejudgment interest of $1,953,610.99, and imposing a civil penalty of $130,000. Watson agreed to be permanently enjoined from violations of Sections 5(a), 5(c) and 17(a) of the Securities Act, Sections 10(b) and 15(a) of the Exchange Act and Rule 10b-5 thereunder, imposing jointly and severally with MWC, disgorgement of $16,383,037.83 and prejudgment interest of $1,953,610.99, and imposing a civil penalty of $130,000. Escobedo agreed to be permanently enjoined from violations of Sections 5(a), 5(c) and 17(a) of the Securities Act, Sections 10(b) and 15(a) of the Exchange Act and Rule 10b-5 thereunder, imposing but waiving disgorgement of $153,822.98 and prejudgment interest of $16,786.56, and not imposing a civil penalty based upon his Sworn Statement of Financial Condition. [SEC v. Mike Watson Capital, LLC, Michael P. Watson, and Joshua F. Escobedo, Civil Action No., 2:11-CV-00275 (DB) (D. Utah)] (LR-21898).

The Securities and Exchange Commission today charged a former consultant for Menlo Park, Calif.-based private investment firm Accel-KKR with insider trading. The SEC alleges that Mark Duffell bought shares of Silicon Valley software company SumTotal Systems while he was involved in discussions on AKKR’s behalf regarding a potential acquisition of SumTotal. Without admitting or denying the allegations, Duffell has agreed to settle the charges against him and pay disgorgement and penalties of over $300,000.

According to the SEC’s complaint, filed in U.S. District Court for the Northern District of California, Duffell met with the CEO of SumTotal on March 2, 2009, to discuss a potential acquisition of the company by AKKR. Two days later, while in possession of confidential information about the potential deal, Duffell began amassing shares of SumTotal stock in his personal trading account. Between March 4 and March 5, Duffell paid nearly $90,000 to purchase 65,000 shares of SumTotal stock at a price of $1.33 per share.

According to the SEC’s complaint, AKKR and SumTotal announced publicly on April 24 that they had signed a preliminary merger agreement under which AKKR would acquire the company at a substantial premium to its trading price. SumTotal’s share price jumped to $3.83 per share on the news, giving Duffell a profit of $162,500 on the shares he had purchased during the confidential discussions.

The Commission’s complaint charges Duffell with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Duffell has agreed to settle the SEC’s charges without admitting or denying the allegations. Duffell has consented to the entry of a final judgment permanently enjoining him from violating Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and requiring him to pay $162,500 in disgorgement, $7,163 in prejudgment interest and a $162,500 civil penalty. The SEC acknowledges the assistance of the Financial Industry Regulatory Authority in this matter. (LR-21899)

In the Matter of J. Jonathan Coleman

The United States Securities and Exchange Commission (Commission) announced the issuance of an Order Instituting Administrative Proceedings Pursuant to Section 203(f) of the Investment Advisers Act of 1940, Making Findings, and Imposing Remedial Sanctions (Order) against J. Jonathan Coleman (Coleman). The Order finds that Coleman was a founding member and the Chief Executive Officer of Jadis Capital, Inc. (Jadis Capital), a New York corporation. Jadis Capital was the sole owner of Jadis Investments, LLC (Jadis Investments), a Delaware limited liability company and Uniondale, Long Island-based investment adviser registered with the Commission. Coleman was a controlling member and Chief Marketing Officer, and then later promoted to President, of Jadis Investments.

The Order further finds that Coleman pled guilty to conspiracy to commit securities fraud, in violation of Title 18 United States Code, Section 371 before the United States District Court for the Eastern District of New York. On August 20, a judgment was entered against Coleman. He was sentenced to a prison term of 24 months followed by three years of supervised release and ordered to make restitution in the amount of $3,303,207.99.

Based on the above, the Order bars Coleman from association with any investment adviser. Coleman consented to the issuance of the Order without admitting or denying any of the findings in the Order, except for the Commission’s jurisdiction over him and the subject matter of the proceedings and his criminal conviction, which he admitted. (Rel. No. IA-3178; File No. 3-14303)

Commission Charges Massachusetts Broker With Fraud as a Result of Churning Accounts of 9/11 Widow

The Securities and Exchange Commission announced that it filed a civil injunctive action today in Massachusetts federal court against James J. Konaxis, of Beverly, Massachusetts, formerly a registered representative of Massachusetts-based broker-dealer Sentinel Securities, Inc. The Commission charged that Konaxis defrauded a former customer who was left widowed by the September 11, 2001 terrorist attacks. Konaxis’s customer made her investments with funds she obtained through the September 11th Victim Compensation Fund.

According to the Commission’s complaint, Konaxis excessively traded his customer’s funds while knowingly or recklessly disregarding her interests. The Commission alleges that Konaxis earned approximately $550,000 over approximately two years in commissions on his customer’s accounts. During this period, the Commission alleges that the value of his customer’s accounts decreased from approximately $3.7 million to approximately $1.6 million, much of which was due to Konaxis’s investments and the resulting commissions paid to Konaxis.

In particular, the SEC’s complaint alleges that Konaxis violated Section 17(a) of the Securities Act of 1933 (“Securities Act”) and Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rule 10b-5 thereunder.

Konaxis has consented to a partial judgment pursuant to which he will be enjoined from future violations of the antifraud provisions of the Securities Act and Exchange Act, and barred from participating in any offering of penny stock. The SEC also seeks disgorgement of ill-gotten gains plus pre-judgment interest, and the imposition of a civil monetary penalty against Konaxis, and Konaxis has agreed to leave these issues to the discretion of the court. The Commission will also institute separate administrative proceedings against Konaxis in which he has consented to be barred from association with any broker, dealer, investment adviser, municipal securities dealer, or transfer agent.

The SEC acknowledges and appreciates the assistance of the Massachusetts Securities Division, which filed separate charges against Konaxis.

In the Matter of Ball Corporation

The U.S. Securities and Exchange Commission announced the issuance of an Order Instituting Cease-and-Desist Proceedings Pursuant to Section 21C of the Securities Exchange Act of 1934, Making Findings, Imposing a Cease-and-Desist Order and a Civil Money Penalty (Order) against Ball Corporation (Ball). The Order finds that from July 2006 through October 2007, Ball, through its Argentine subsidiary Formametal, S.A. (Formametal) and non-governmental customs agents, offered and paid at least ten bribes, totaling at least $106,749, to employees of the Argentine government to secure the importation of prohibited used machinery and the exportation of raw materials at reduced tariffs. The Order further finds that although certain accounting personnel at Ball learned soon after Ball acquired Formametal in March 2006 that Formametal employees may have made questionable payments and caused other compliance problems before the acquisition, Ball failed to take sufficient action to ensure that such activities did not recur after Ball took control of Formametal. The Order finds that Ball violated the books and records and internal controls provisions of the Foreign Corrupt Practices Act, Exchange Act Sections 13(b)(2)(A) and 13(b)(2)(B), in connection with bribes that Formametal paid to Argentine customs officials in 2006 and 2007.

Based on the above, the Order requires Ball to cease and desist from committing or causing violations and any future violations of Exchange Act Sections 13(b)(2)(A) and 13(b)(2)(B) and to pay a $300,00 civil penalty. Ball consented to the issuance of the Order without admitting or denying any of the findings contained in the Order. (Rel. No. 34-64123; File No. 3-14305)

The Commission Dismisses Its Claim for Disgorgement, Prejudgment Interest and Civil Penalties Against All Defendants Due to Criminal Sanctions

The Commission announced that it dismissed its claims for disgorgement and civil penalties against three individual defendants due to prison sentences and restitution orders entered against the defendants in a parallel criminal action. The Commission dismissed its disgorgement and civil penalty claims against Ronnie Eugene Bass, Abner Alabre, and Brian J. Taglieri in light of Bass’s 204-month prison sentence and $3.9 restitution order, and 60-month prison sentences and $3.9 million restitution orders against Alabre and Taglieri. See US v. Bass, et al., Crim. Action No. 09-80129-CR.

On October 16, 2009, the Commission filed its complaint against Bass, Alabre and Taglieri, along with two companies, HomePals LLC and HomePals Investment Club, LLC (collectively HomePals). The complaint alleged they ran a Ponzi scheme and affinity fraud that targeted Haitian–American investors residing in South Florida. Alabre and Taglieri both consented to the entry of an injunction against future violations of the federal securities laws. Bass and HomePals defaulted by failing to appear, answer or otherwise plead in response to the Commission’s complaint and a default judgment of permanent injunction was entered against them. The Commission also dismissed its disgorgement and penalty claims against the two HomePals entities. [Securities and Exchange Commission v. HomePals, LLC, HomePals Investment Club, LLC, Ronnie Eugene Bass, Jr., Abner Alabre and Brian J. Taglieri, Civil Action No. 09-CV-81524-Ryskamp/Vitunac (S.D. Fla.)] (LR-21900)

INVESTMENT COMPANY ACT RELEASES

Orders of Deregistration Under the Investment Company Act

Orders have been issued under Section 8(f) of the Investment Company Act declaring that each of the following has ceased to be an investment company:

American Family Life Insurance Company, et al.

A notice has been issued giving interested persons until April 20, 2011 to request a hearing on an application filed by American Family Life Insurance Company, et al. requesting an order pursuant to Section 26(c) of the Investment Company Act of 1940 to permit the substitution of shares of a certain registered management investment company with shares of a certain other registered management investment company. (Rel. IC-29617 - March 24, 2011)

SELF-REGULATORY ORGANIZATIONS

Immediate Effectiveness of Proposed Rule Changes

A proposed rule change filed by NASDAQ OMX BX, Inc. relating to changing the start time for trading (SR-BX-2011-016) has become effective pursuant to Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of March 28, 2011. (Rel. 34-64105)

A proposed rule change filed by the Chicago Board Options Exchange, Incorporated (SR-CBOE-2011-024) to extend pilot programs relating to FLEX Exercise Settlement Values and Minimum Value Sizes has become effective under Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of March 28, 2011. (Rel. 34-64110)

A proposed rule change filed by the International Securities Exchange, LLC (SR-ISE-2011-14) relating to fees for Qualified Contingent Cross orders has become effective under Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of March 28, 2011.(Rel. 34-64112)

A proposed rule change filed by NASDAQ OMX PHLX LLC (SR-Phlx-2011-36) relating to the equity options monthly cap has become effective under Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication of the proposal is expected to made in the Federal Register during the week of March 28, 2011. (Rel. 34-64113)

Order Approving Proposed Rule Change

The Commission approved a proposed rule change filed by International Securities Exchange, Inc. (n/k/a the International Securities Exchange, LLC) (SR-ISE-2006-01) to amend the Exchange rule governing Directed Orders. Publication is expected in the Federal Register during the week of March 28, 2011. (Rel. 34-64115)

Securities Act Registrations

The following registration statements have been filed with the SEC under the Securities Act of 1933. The reported information appears as follows: Form, Name, Address and Phone Number (if available) of the issuer of the security; Title and the number and/or face amount of the securities being offered; Name of the managing underwriter or depositor (if applicable); File number and date filed; Assigned Branch; and a designation if the statement is a New Issue.

Amendments to the Registrant's Code of Ethics, or Waiver of a Provision of the Code of Ethics

5.06

Change in Shell Company Status

6.01

ABS Informational and Computational Material.

6.02

Change of Servicer or Trustee.

6.03

Change in Credit Enhancement or Other External Support.

6.04

Failure to Make a Required Distribution.

6.05

Securities Act Updating Disclosure.

7.01

Regulation FD Disclosure

8.01

Other Events

9.01

Financial Statements and Exhibits

8-K reports may be viewed in person in the Commission's Public Reference Branch at 100 F Street, N.E., Washington, D.C. To obtain paper copies, please refer to information on the Commission's Web site at http://www.sec.gov/answers/publicdocs.htm. In most cases, you can view and download this information by using the search function located at http://www.sec.gov/edgar/searchedgar/companysearch.html.